January 27, 2020 / 6:44 AM / 21 days ago

Nikkei drops, tourism shares hit by growing China virus concerns

* Nikkei falls 2.0%, biggest in 5 months

* Airline, Tokyo Disney Land operator among hit hardest

* Suspicions of accounting problems hit Net One System, Aruhi

* Maker of protective attire, masks, hospital apparatus soar

By Hideyuki Sano

TOKYO, Jan 27 (Reuters) - Japan’s Nikkei share average posted its biggest one-day loss in in five months on Monday, with tourism-related stocks under pressure amid fears that a virus outbreak in China could be more deadly and harder to contain than initially thought.

The Nikkei share average slumped 2.03%, its biggest percentage fall since Aug. 26, to end at 23,343.51 points, the lowest finish since Jan. 8. The broader Topix lost 1.61% to 1,702.57.

China extended its Lunar New Year holiday and more big businesses shut down and told staff to work from home in a bid to contain the spread of the disease as the death toll rose to 81.

“While we can’t tell how much the disease will spread, one thing we can say for sure now is that consumption in China is already taking a hit as Beijing tries to contain the epidemic,” said Hiroyuki Ueno, senior strategist at Sumitomo Mitsui Trust Asset Management.

The Chinese government had barred outbound packaged tour travel for Chinese travellers, denting shares of Japanese companies that have benefited from a rising influx of Chinese tourists.

Topix airline shares subindex fell 3.4% to their lowest since May 2017, with ANA Holdings and Japan Airlines falling 3.0% and 3.9% respectively.

Shares of Oriental Land dropped 7.8%, the biggest fall in five years, following a Nikkei report that the operator of Tokyo Disney Resort is likely to post its first fall in profit in three years in the nine months ended December.

Travel and leisure firm H.I.S. fell 6.8%, while Keisei Electric Railway, which runs trains to Tokyo’s Narita Airport from the city centre, shed as much as 6.2%, largest loss in 3 1/2 years for the usually defensive stocks.

Cosmetic makers were also affected as their top-line has been boosted by Chinese demand, with Shiseido down 5.5% and Kose declining 5.9%.

On the other hand, protective outfit maker Azearth and Airtech Japan, who manufacture various apparatus for hospitals to prevent infections, rose by their daily limits, jumping 23.7% and 17.1% respectively.

Niitaka, which makes disinfectors, gained 21.8% while mask maker Kawamoto Corp shot up 21.6%.

Elsewhere, Net One System, which has been reported to have spearheaded fictitious transactions involving several companies to pad profit, sank 23%.

Aruhi lost 11.1% on media report of document fabrication at the housing loan provider’s franchise firms. The company said it has not confirmed the existence of such problems. (Reporting by Hideyuki Sano, Editing by Sherry Jacob-Phillips & Kim Coghill)

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